Posts tagged ‘US’

The US-China trade dispute has evolved into a very different animal in the past year.

After multiple bouts of tariffs and counter-tariffs, on August 23, Beijing slapped a 5% levy on US crude for the first time, targeting a commodity already influenced by the trade tensions, and adding to a swathe of US-origin commodities like propane, LNG and soybeans.

Global steel mill margins have shrunk in 2019, in turn pushing down iron ore and coke consumption and prices for coking coal.

In 2018 Platts benchmark US hot rolled coil (HRC) spot prices exceeded $1000/mt delivered Midwest for the first time since 2008, and the sustained run in steel pricing and demand since 2016 delivered high profits for steel producers.

Like many ways the Trump administration has reshaped US policy norms, the use of tariffs and tariff threats to address non-trade policy issues with other countries is here to stay, and companies like US Gulf Coast refiners are learning to adapt.

That reality has set in for the energy sector not only because of the ongoing trade conflict with China, but also since President Donald Trump’s threat to impose a 5% tariff on all Mexican imports.

An upcoming decision on Dutch gas output will be significant for European wholesale markets, while in bunker markets the impact of IMO 2020 is being felt in differentials between high and low sulfur marine fuels. S&P Global Platts editors delve into key energy trends for the week ahead.

The traditionally strong correlation between ferrous scrap and iron ore has been eroded by global trade upheavals and economic troubles in Turkey, the largest import market for steel scrap.

Previously, the relationship between ferrous scrap and iron ore prices often meant price movement in one would lead to a corresponding price change in the other – with market participants trading on this correlation.

Large-scale LNG liquefaction and export facilities are helping to write the demand story for US natural gas reserves. But there is a newer demand factor for that gas: small-scale facilities sending LNG to otherwise little-tapped markets and finding new applications for the fuel.

Small LNG plants, usually with production capacities of less than 1 million mt/year, are springing up across the US to service niche markets, such as providing IMO-compliant bunker fuel to oceangoing vessels, meeting peak-shaving demand and serving a growing export market in the nearby Caribbean.

Canada’s three major options for new oil pipeline capacity continue to face delays and court challenges, but existing North American pipelines are finding ways to move more barrels to refiners and export docks on the US Gulf Coast.

Midstream companies’ second-quarter earnings cycle revealed a wave of compressor-based pipeline expansions across the US Rockies and Midwest to increase throughputs at low costs and without major regulatory and construction risks.

Saudi Arabia has no easy answer to falling oil prices. The kingdom could provoke an international backlash by slashing exports, or open a new war with US shale producers by flooding the market with cheap crude. The former risks the ire of President Donald Trump, but the latter would shatter the fragile economies of its OPEC partners and threaten the IPO of Aramco.

The value of Brent crude has slumped 20% since April and traded for most of last week briefly below $57/b after a slew of bad data tethered the market’s few remaining oil bulls. OPEC’s members led by Saudi Arabia require oil trading closer to $80/b to sustain their high-spending autocratic economies. Higher prices are also a prerequisite for Saudi Aramco’s delayed IPO, despite the state-owned producer reporting almost $47 billion of net income in the first half.

Almost 10 GW of utility-scale and grid-connected battery storage will be operating in the US by 2023, S&P Global Platts Analytics forecast in its latest US Power Storage Outlook.

A combination of dropping costs and diversification of use cases points to accelerating storage uptake, with annual storage investments set to increase tenfold from under $0.3 billion in 2019 to around $3 billion in 2023. However, new policy and technology risks are emerging.